EV fans are accustomed to Henrik Fisker making plans for ground-breaking electric vehicles. We want Mr. Fisker to succeed. But there’s a telltale sign that the economic fundamentals of his new EV aren’t quite worked out: It’s offered only “in a flexible lease,” a scheme commonly described as a car subscription.
The famed auto designer—whose Karma plug-in hybrid hit the skids in 2012—did little to assuage any doubts when he revealed the name of his new vehicle this week. Fisker, quite literally, is promising the Ocean. The vision is complete with a full-length solar roof and vegan interior. (For nearly two years, Fisker has been saying that his solid-state battery will go 500 miles on a single charge with charging times as low as one minute.)
The 80-kWh Ocean is scheduled for production in 2021. Fisker didn’t reveal pricing details, but offered this statement:
“The future of mobility is about enjoying an electric vehicle without hassle, long-term commitment, and the prohibitive high cost of ownership.”
Leaving aside that EVs have a lower cost of ownership, the timing was unfortunate. In a sign this week that car-subscription businesses are in trouble, Scott Painter, the founder of Fair.com, resigned as the company’s CEO. The news of Painter stepping down follows the company laying off about 40-percent of its staff last week. In September, Fair.com had acquired Canvas, Ford’s car subscription service, after the automaker gave up on subscriptions.
Offering an electric car in an all-inclusive subscription doesn’t have a good track record. In April 2017, Hyundai offered its Ioniq Electric in a so-called unlimited subscription program for $275 per month. It allowed California consumers to lease the electric car with no money down (after applying the $2,500 state rebate)—and then to be reimbursed for charging. The idea was to eliminate concerns about the cost of electricity.
But the concept didn’t take hold. Eighteen months later, Hyundai pulled the plug on its EV subscription program.
Perhaps Volvo will have better luck when it adds the Volvo XC40 Recharge to its “Care By Volvo” all-in-one subscription plan. The Swedish automaker is so far the only automaker to show signs of success with subscriptions. After offering the gas-powered XC40 with an all-inclusive price of $700 a month starting in late 2017, the automaker in August 2019 expanded the service to several models.
The argument for car subscription is that a single all-inclusive monthly fee—covering insurance, maintenance, and financing—is a better deal than a purchase or lease. Moreover, it offers greater flexibility to switch between cars or otherwise avoid a long-term commitment. A relatively staid car brand like Volvo might make that argument to brand loyalists about its safe and reliable cars.
However, it doesn’t inspire confidence to introduce an unknown brand—especially a concept promised as a game-changer—and then say it’s only offered in a subscription. For electric car fans, it harkens back to the EV1-era, when lease-only vehicles from GM and Toyota were reclaimed and destroyed. The more recent Honda Fit EV was similarly offered only as a lease and then discontinued.
At the least, making a big deal about a subscription-only EV smacks of throwing spaghetti at the wall to see what sticks.
To make matters worse, Fisker’s flexible-lease plan lumps its reasonable SUV with the recently announced improbable, all-electric, quasi-autonomous, seven-seat Canoo, which was described by its founders as a “loft on wheels.” Few details are available about Canoo’s technology or its monthly price. But the company said that it would be offered in 2021 in a Netflix-style subscription model.
Reinventing so many things at the same time is confusing to consumers. Focus on making a worthwhile and trustworthy EV, and then allow consumers to buy it or lease it. You can also experiment with a subscription option, but making it available only by-the-month is an unnecessary distraction.
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